Feb 23, 2013

Singapore - Incomes up for most, not for poorest

SINGAPORE - Singaporean households are earning more income from work, the latest
official figures show, though the rise was not across the board.

Lower- and middle-income families
saw their earnings go up last year - even after taking into account inflation -
continuing a trend over the past five years.

But the bottom 10 per cent did
not do as well: Their real income, after adjusting for inflation, actually fell
last year.

Some economists attributed the
slip to the restructuring of Singapore's economy that has slowed growth and
hastened inflation.

Still, for the majority of
households, the figures from the Department of Statistics (DOS) painted a
picture of improved standards of living. The DOS report was released on
Wednesday, ahead of Budget Day next Monday.

It shows the median monthly
household income - the midpoint of a range - rising from $7,040 in 2011 to
$7,570 last year.

This worked out to a 7.5 per cent
increase, but when inflation and changes in household size were taken into
account, the rise slowed to 1.9 per cent.

Over the past five years, the
median real monthly income has risen by a total of 13 per cent.

As for households in the bottom
10 per cent, their incomes shrank by 1.2 per cent last year, a reversal from
the previous year's growth of 5.8 per cent.

The decline was a result of
including imputed rentals on owner-occupied homes in the calculation of the
consumer price index (CPI) used to adjust for inflation.

Imputed rental, a proxy for
housing prices, represents the rent a person would have paid if he was not the
owner of his home.

As this is notional and not cash
actually spent, the DOS report noted that if it was removed from the equation,
the bottom 10 per cent would have enjoyed an income rise of 0.8 per cent.

Besides, actual rent paid on
rented homes are included separately in the CPI.

Even so, DBS economist Irvin Seah
argued that the improvement for those in the 11th to 20th percentile last year
was "very modest" - 1 per cent - compared to the significant rise of
5.1 per cent of those at the very top.

"This restructuring exercise
has hit the low-income group significantly more. Low-income Singaporeans
typically do part-time work and are lower-skilled, hence the risk of losing a
job or assignment is higher," he said.

The income gap also widened last
year.

The Gini coefficient, a measure
of income inequality, rose from 0.473 in 2011 to 0.478. But government
transfers such as Workfare and Growth Dividends helped to narrow the gap.

Lower- and middle-income families
saw their earnings go up last year - even after taking into account inflation -
continuing a trend over the past five years.

While family members received an
average of $1,340 from government schemes last year, those in one- and two-room
Housing Board flats got the most - $6,140 - the DOS report noted.

Still, the figures may not
capture all the help the bottom 10 per cent gets, such as free medical services
and food rations, said MP Seah Kian Peng, who heads the Government
Parliamentary Committee (GPC) for Social and Family Development.

He noted that over the past five
years, real income for the 11th to 60th percentile groups grew cumulatively by
double digits, more than those in the 60th to 90th percentiles.

"The gap is narrowing.
There've been deliberate efforts to move wages up," said Mr Seah, chief
executive of FairPrice.

He wants this year's and future
Budgets to lift wages for those at the bottom and manage pressures on cost of
living, from childcare and eldercare to housing.

Finance GPC deputy chairman Liang
Eng Hwa called for continued upgrading of these workers' skills and a
tightening of the inflow of foreign labour to "nudge up" wages of the
locals.

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